Generating Plan and Member Savings Through Tailored Pharmacy Benefits

Seeking Customization and Cost Management for a Retiree Population

Kentucky Rural Electric Cooperative (KREC) is a consortium of 13 nonprofit electric utility cooperatives. With a member population that includes retirees on the Medicare Part D prescription drug benefit, KREC wanted to take control of its costs for both the plan and its members by eliminating ancillary expenses that didn’t benefit members. The plan also wanted to tailor its pharmacy benefits to better serve its retiree population and to improve member health through expanded wellness benefits.

To accomplish this, KREC reevaluated its traditional pharmacy benefit manager (PBM) and decided to seek a fully transparent PBM that could develop solutions customized to its population and enable greater cost management. Based on these criteria, KREC selected Navitus as its PBM partner.

Improving Efficiencies with a Medicare Wrap

Prior to Navitus, KREC’s commercial and Medicare populations were served by two separate pharmacy networks and benefit plans, causing confusion and disruption. Retirees used two different PBM benefit cards to pay for their prescriptions and pharmacies had to adjudicate each claim twice, once for each plan.

Working closely with KREC, Navitus designed a wrap solution that applies the same national network to both populations and provided a single-point claim adjudication and plan administration for both the Medicare plan and the commercial plan. Thanks to this change:

• KREC’s Medicare EGWP plan benefited from Navitus’ full pass-through model, receiving all rebates, coverage gap discounts and subsidies from CMS
• Pharmacies could now process claims with a single adjudication for both the commercial plan and Medicare plan, ensuring that eligible claims were processed through Medicare Part D first
• Retirees gained the convenience of using only one card and peace of mind knowing that they would receive all of their benefits from both plans

Implementing a Vaccination Program

To improve member health, KREC implemented a vaccination program that enabled members to conveniently receive vaccines at any pharmacy in the Navitus National Network. Covering vaccines for influenza, pneumonia, tetanus, hepatitis, meningitis, shingles, HPV and varicella, the program encouraged member participation by removing roadblocks to accessibility.

Reducing Costs Through Formulary Management

In addition to a self-funded Medicare wrap, Navitus identified a second cost reduction opportunity in KREC’s formulary management. Instead of a common formulary that prioritized rebated above all else, Navitus enabled KREC to switch to a well-managed formulary that prioritized the lowest net cost without compromising access to clinically-effective medications. This formulary was then paired with a comprehensive suite of utilization management tools, including prior authorization, step therapy and quantity limits.

Reducing Costs Through Formulary Management

In addition to a self-funded Medicare wrap, Navitus identified a second cost reduction opportunity in KREC’s formulary management. Instead of a common formulary that prioritized rebated above all else, Navitus enabled KREC to switch to a well-managed formulary that prioritized the lowest net cost without compromising access to clinically-effective medications. This formulary was then paired with a comprehensive suite of utilization management tools, including prior authorization, step therapy and quantity limits.

Realizing Plan and Member Savings

• $1.3 million in first-year savings, a 29% reduction compared to the previous year
• A 24.6% decrease in per member per month (PMPM) costs in the first year to $70.99
• A 13% increase in generic utilization in the first two years

These savings benefited not only the plan, but also its members: The average first-year member cost share was only 18.4%. In contrast, the average cost share is 30% for family coverage and 18% for single coverage¹. KREC’s results are especially impressive given that cost share is typically higher for older members and smaller organizations¹.

Getting Started

Are you interested in exploring how a truly transparent, pass-through model could lower your plan spend? Contact us at [email protected] to learn more.

¹ Claxton G, Rae M, Damico A, et al. Employer Health Benefits: 2019 Annual Survey. Kaiser Family Foundation. https://www.kff.org/health-costs/report/2019-employer-health-benefits-survey/. Published September 25, 2019. Accessed October 11, 2019.